• Table of Contents
    • Abstract
    • Keywords
    • Article
      • History and description
        • General choice theory (GCT)
        • Expected utility theory (EU)
        • Subjective expected utility theory (SEU)
        • Rational expectations equilibrium (REE)
        • Non-cooperative game theory (NGT)
      • Rationality and mind
      • Rationality and behaviours
        • Recontextualizing decision
        • Constructing rationality
        • The content of preferences and beliefs
        • Different psychologies
      • Conclusion
    • See Also
    • Bibliography
    • How to cite this article


Lawrence E. Blume and David Easley
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Economic theory takes the individual consumer and firm as a primitive unit of analysis, and so a theory of individual agency is required to derive hypotheses about the behaviour of markets and other systems of economic interest. One such theory is the principle of rationality, whereby agents act in their perceived best interest. This article surveys the implementation of this principle in economic models, and discusses the critiques of the rationality principle and some proposed alternatives from the perspective of the economic modeller.
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How to cite this article

Blume, Lawrence E. and David Easley. "rationality." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 19 January 2018 <http://www.dictionaryofeconomics.com/article?id=pde2008_R000277> doi:10.1057/9780230226203.1390

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